TELECOMS companies have been urged to make "fundamental adjustments" or risk going under amid stiff worldwide competition.

Authors of a new research paper, including a Newcastle University business expert, accuse many telecommunications companies of still operating on the principles of the "old industrial economy".

The study, published today, urges companies to "sharply examine and revise outdated pricing policies" to encourage greater revenues and reverse the recent stock market slump in telecoms shares.

Feng Li, professor of e-business at Newcastle University Business School, said telecommunications companies formed the backbone of the new economy, developed around the global technological revolution.

"Although they provide essential infrastructure for the new economy, most of these companies themselves are still operating on the very different principles of the old industrial economy."

Professor Li said traditional pricing models were "still abundant", despite not suiting the highly competitive market where some costs were rapidly falling and profit margins are increasingly being squeezed.

Until recently most of the companies benefited from the telecoms boom and a corresponding rise in share price.

But investors lost confidence when the companies failed to reap the huge revenues they had expected to gain, resulting in share values plummeting.

Prof Li and co-author Dr Jason Whalley, of Strathclyde University Business School, believe the slump in the industry's fortunes represent "a crucial time" for companies to examine their failings and to put them right.